tv Nightly Business Report PBS May 10, 2013 7:00pm-7:31pm PDT
>> this is "nightly business report." brought to you by -- >> real money helps you think through ideas for investing and trading stocks. action alerts plus is a charitable trust portfolio that provides trade by trade strategies. social media. we are the street.com. >> dollar dilemma. the green back is getting stronger. who benefits. who gets hurt and what does it mean for your wallet? >> shareholder pressure. executives are coming under fire for the titles of both chairman and ceo. but do investors really benefit if the roles are split.
>> and the great gatsby gamble. will the big bet on this literary classic pay off. >> good evening, everyone. incredible winning streak on wall street continues. >> another week of records. that wraps up three weeks in a row of gains on wall street as that final hour of push helped the dow and s&p 500 close out the day at all time closing highs with stocks getting help from solid earnings reports in the uk this weekend. the dough ended nearly 36 points higher. the record close there, 15.118. >> the big talk on wall street and all across corporate america
today, the mighty american dollar. the u.s. dollar has been getting stronger against other currencies, especially the japanese yen. that's because japan's central bank announced an aggressive plan to stimulate its economy with a glood of money and it's working. so who wins and who loses when the dollar gets stronger and what does all of this mean to you? >> for american consumers, a stronger dollar means the prices of goods from foreign countries like electronics, computers, and cars, may be lower if current trends continue this week the dollar got more expensive in japan, topping 100 yen for the first time in four and a half years. one of the triggers? the central banks in japan and elsewhere are following the federal reserve's lead.
they are spending more money. when the supply of any currency begins to grow as it is in japan, the price comes down. when the price drops, you can buy more with the u.s. dollar. that's why the dollar index, measuring the value of the dollar, has been climbing since earl february. up about 4.5%. a stronger dollar means americans traveling overseas this summer will have more buying power than they have in recent years. foreign tourists will find it costs more to visit the united states km means their purchasing power is lower and they won't be able to buy as much as they could have before. the same is true on a big scale for u.s. exports. u.s. multinationals have billions of dollars in hef ewes at stake, particularly in europe. already this year, ford, gm,
caterpillar and general electric have all announced plant closings and lay offs in europe. smaller revenues will affect profits. for nightly business reports, i'm courtney reagan. >> and chief international strategist is with us from wells fargo. is this a case of the dollar getting stronger or others getting weaker? >> it's definitely a case of the yen getting weaker. also about flat. this is really a yen depreciation story. >> which is more important for consumers and investors. then on the other side, the
profits of big corporations will be affected. which is more important? >> well, that's right. when you have an exchange rate change, it's a price rate change and some people will be better off or the same people will be better off in one sense and the others could be worse off in another sense. i would say there is a third factor that is more important than ether of those two. coming to the u.s. to buy stocks and bonds. it's going to boost the value of u.s. financial assets and that's ultimately where i think u.s. investors and residents will gain the most. if i am a u.s. stockholder and my portfolio is mostly u.s. stocks you see this on balance as being a positive for me. right now it's a positive, especially when you consider
that those companies are also selling here in the united states and those sales are going to get stronger as the u.s. economy continues to strengthen. so it's not just a question of what happens to the earnings overseas. >> individuals taking advantage of currency markets of all of these changes going on. is there anyway for the individual to do that? >> there are ways for investors to take position but we think it's very risky. especially for a long term investor. that person should be considering that foreign exchange markets tend toover shoot. prices can move wildly up or down before they finally correct. we would be more inclined to stay with more conventional stocks and bonds both here in the u.s. and overseas. >> an awful lot of the moves have been driven by the central
banks. the fed here, the bank of japan in tokyo. what happens when those three or one or more of those three back away from what have been unconventional monetary policy flooding the system with cash? what's then? >> that's a key question. and investors need to remember that once the fed, if the fed decides to step away from these unconventional policies, is going to be for a reason. that reason will be that the u.s. economy will be strong enough to stand on its own and generate good growth on its own. being able to manage on their own. then you will see quantitative easing and other programs like that from the central banks. >> paul christopher, thank you very much. chief international strategist
at wells fwar fargo. >> bad news for corn traders could be good news for consumers. a record crop of corn, and soybeans are being projected. corn futures and wheat preess fell. >> and raising the stakes in a bid to take over dell computer. along with partners, he is launching a fresh challenge to michael dell's plan to take the company he founded private for more than $24 billion. it would pay shareholders only $12 a share. it would allow them to keep some stakes in the pc makers. and no words were minced. >> look at it and know that it's good and i will tell you. this one is a real good one.
look at it real similar plisically and not have to do a lot of work. >> shares of dell finished the day higher. they closed at $13.45. >> despite a solid overall earnings season, some shareholders are still not happy. and some are looking for changes in the highest ranks of corporate america. specifically they want to split the tradition of a ceo also being the company's chairman. >> reporter: the very top of the corporate ladder, a shakey place. investors tired of bad headlines pushing for change. the latest firm to respond? hess is nominating the former head to be its non-executive chairman. some shareholders may want all firms to split the roles of ceo and chairman but an attorney
says it's better done on a case by case basis. >> that will vary from company to company and it will vary from the situation that a company is in at a particular point in time. >> restructuring years of underperformance prompting activist investor to mount a proxy site. where a series of missteps prompted 41% of shareholders to with hold votes. he later stepped down. 70% with holding votes for long time chair. tarnished by a $6 billion trading loss, dimon still posted record profits.
>> i think he is as first rate as it gets. for nightly business report, i'm mary thompson. >> splitting the dual role is not always in the best interest of the company. karen, thanks for joining us. most investors think that splitting these two roles, it will reduce conflict of interest and will have more of an independent part. ewe say that's not necessarily the case? >> no. every director gets one vote. at the end of the day, splitting the roles does not change the dynamic. sometimes ipt's appropriate to split the roles.
there are specific instances where it could be helpful and effective. but really it is not one size fits all. i think one of the good elements is that we allow for different cases and contexts to respond to the needs of the particular situation and in the case of jp morgan, the company has performed in a stellar fashion. and while it did have a very unfortunate trading event last year, the disastrous trading event. the key is how it responds and how its leadership responds. i think it has generally gotten good remarks. rsh let me take the question and turn it inside out.
is splitting the role ever really harmful? what's wrong with it? if there is not somebody sitting in that position already as chair and ceo, then it's very possible that having two separate individuals hold hold those positions could make sense. so the idea to have change for change sake is not necessarily fair to the individual involved and it certainly does not help the dynamic on the board level. >> we have seen so many changes out of washington that were supposed to help make the board stronger and yet still from individual investors you hear a lot.
what is your assessment? >> i think there are two points. the latest regulations have been help f helpful the ceo is also chaired and leaves the room and the board can have a session. only the board itself without management present. i think it's a challenge to maintain independence and diversity of thought. the key is to have a healthy respectful engagement with independent thinking as part of the dynamic in a board room.
>> thank you so much. >> still ahead, four high quality stocks that could perform well over the next year. tonight's market monitor. we will tell you what they are and why they are buys. but first a look at how the international markets closed today. >> the company rolling out a lease to own program in its stores for customers with credit
problems. they will be able to lease items and eventually own them by making monthly payments. investors see positives and pushed the shares higher all day. up more than 7%. >> nissan is getting help from the weak japanese yen. the automakers said today, earnings serged 46% as it converts overseas profits at a more favorable rate. they were up every day for a gain of 8.5%. the company confirmed talks with specialty pharma company.
>> roughly in line with expectations but investors sold off concern about future profitability. the company makes elements for led video screens. display shares lost more than 17.5% and finished the day at 17.50. >> so we are waiting for your top four? >> okay. well the reasons that the markets going up, all of them remain in place which are that the fed is supplying enormous liquidity. third you have sensible valuations on equities based on long term valuations and finally in the type of environment that we're in, there is no powerful investment alternatives to stocks. bond provide low yields.
gold doesn't compete. so you might as well own share of growing profits to get a total return in this type of environment. all of those conditions remain in place. >> do you believe we're in the middle of a long term secular market or in the early begins of one? >> we have been in one for sometime and the answer to that question depends on the news going forward. the risks that we have to watch are that there is tremendous speculation that has crept into the u.s. credit markets because of the fed's easy money policy there, chasing people to take risks that may or may not end up being prudent. the same thing is going on in europe. and also, the geo political situation in the middle east poses risks.
so what i would say is that if none of the triggers are pulled, a credit event in the united states or europe. we will end up with stocks ultimately beingover valued and that would be the end of the bull market. >> what's going through some of your stock picks that you think will do well in this environment. had a nice run so far this year. $85 today. how much higher do you think you can go? >> you want to stay in because the situation remains good. the need of its customers to buy its product and sells it at 15 times earnings and has a 3%
dividend. it could happen. that would be the point at which stocks are overvalued. >> microsoft and intel that used to be joined at the hip in a good way for much of the past decade and a half and now they are joined in a bad way. >> that's what gives you the opportunity. they have missed the movement and trying to remedy that and they do have the market share and the balance sheets to remedy it. in the case of intel just a touch higher than that. in the case of intel.
a little less than 4%. you get a good return on the stock. >> have a great weekend. >> an incredible story of survival. a disaster in bangladesh. a woman was discovered alive by evacuation crews. she found in the basement where she hid after fleeing the falling building. >> terpts were somehow in the 90s. >> this is now a thousand individuals killed, worst disaster maybe of all time. >> coming up, hollywood is making a big bet on a literary buassic.
dec dec decaprio heads up an all star cast. for producers of the film, a whole lot riding on the film. >> an amusement park. the summer crowded with action and super heroes. the novel may not be a typical 3d affair but it's off to a great start. >> action. >> warner brothers is setting an iconic title, expensive production and a hit sound track will justify the budget and tens of millions of dollars of additional marketing spent. >> everything about this money exudes money in the way that the great gatsby did itself. >> and millions of dollars of
free promotion. but it is a big bet. warner brothers doubled down when it held off on its release date. >> it offers great counter programming to something like an iron man which will be dominating the multiplex. >> warner brothers has a particularly busy summer. six more films before labor day starting with the hang over3 and then man of steel followed by big budget pacific rim, the comedy we're the millers and thriller the get away. >> that sz not impacting movie goers. d reaction online has been positive. >> expected to have a great opening weekend but it's facing stiff competition from iron man three. many expect it will be a box
office winner. >> the final section of spire was put into place. cheers and applause were on hand for the final insulation. the tallest building in the western hemisphere. what a beautiful day to do it. it stands now at a symbolic 1776 feet. i can't wait to see it when i drive home tonight. >> it is a long time coming. >> that's the nightly business report for tonight. have a great weekend, everyone, and a happy mother's day for you. >> and a happy mother's day to you, by the way. have a great weekend. >> i hope so. >> i hope everyone takes care of you. happy mother's day. we will see you monday. >> nightly business report has
turmoil at the top in oakland. two days after police chief howard jordan abruptly stepped down, another shakeup. prison realignment under attack. again. the latest comes from lieutenant governor abel maldonado. >> i'm here to discuss an issue that threatens the lives of every californian. >> pg&e faces a record fine for the blast. more than $2 billion. plus, former bay area comic w. kamau bell, totally honest, totally unfiltered about his hit show "totally biased." >> as a black person in america, you have to find humor in race, or you'll go crazy. >> coming up next.